February 23rd, 2011 | Published in Uncategorized
“One of the most misunderstood concepts in the construction industry is the difference between productivity and production. Due to the nature of accounting principles used to manage company profitability, most measurements of job productivity are actually bookkeeping measurements of production,” according to a recent Construction Executive article.
The authors (Dr. Perry Daneshgari and Heather Moore of MCA, Inc.) go on to explain:
“The existing methods of measuring productivity primarily focus on accounting measures, such as Earned Value Analysis, which lack the jobsite reporting capability to allow contractors to make decisions or adjustments that would improve productivity. Accounting methods are primarily after-the-fact reporting of quantitative or earned value measures, and offer no information for improving the productivity of a construction project as it unfolds.
Because the National Institute of Standards and Technology (NIST) identified the need for a metric to measure construction productivity, the Job Productivity Measurement (JPM) standard was introduced. JPM measures construction productivity by comparing work performed to construction put in place. It assesses the quality of the construction outcome by measuring observed completion of the project as accepted by the customer. The practice reduces the need for end-of-the-job inspection on construction projects by providing ongoing and periodic feedback on errors, repairs and rework. By measuring productivity and its changes during construction projects, issues can be identified and resolved as the job progresses, resulting in better productivity on jobsites.
This standard practice is needed by all stakeholders throughout the construction industry to establish a uniform method for measuring productivity based on construction put in place. JPM reporting is simple, yet it gives an appropriate level of detail in the output to be used for productivity monitoring and improvement, from the job level all the way up through the national level.
Moreover, contractors that apply JPM tracking can improve their profitability. By correctly recognizing progress on jobs, they can accurately bill for completed work, improving their cash flow.”
Read the article in its entirety here at the magazine’s web site.
How do you measure productivity?